These figures will be encouraging for the Government, in the wake of their response to the Options for Defined Benefit Schemes consultation last week. Under the Government’s plans, schemes will be able to more easily access scheme surpluses in a bid to boost investment and benefit scheme members.
LCP runs an annual survey of the DB market to understand the key challenges and issues that the industry faces. This year’s survey was conducted in March and April, and the full results and report will be published later in June.
One of the questions in the survey was what impact schemes expected the new rules on surplus sharing to have. While 45% of respondents said that the new rules will have no impact as they have no intention of sharing or distributing their surplus, 29% said it will be potentially significant, and they will review their strategy, 20% said there would be no impact as they are already planning to share or distribute their surplus and 6% said it will be a significant development and that their strategy will change.
Mary Spencer, Partner at LCP, commented: “It’s encouraging to see how many schemes are already actively considering what the new rules around surplus use might mean for them, recognising the potential benefits for both members and sponsors – and we would expect this has only grown with last week’s announcements. This backs up our experience, and we have been helping a number of our clients make active decisions on their strategy in anticipation of the changes. Of course, not all schemes will want to use any new flexibilities, and actual practice will depend on the ultimate policy detail and, crucially, the protection given to members. But it’s great to see schemes being promised additional flexibility, with LCP having been a key industry voice advocating for policy change in this area over recent years.”
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